Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

MR. ROSS McWHIRTER (SHOOTING)

Mr. Berry (by Private Notice): Mr. Berry (by Private Notice) asked the Secretary of State for the Home Department if he will make a statement on the killing of Mr. Ross McWhirter.

The Secretary of State for the Home Department (Mr. Roy Jenkins): The House will be fully aware of the basic facts as reported in the Press of the shooting yesterday evening of Mr. Ross McWhirter at his home in Enfield. There is at this stage no information which I can add, and I believe it would be preferable, from the point of view of the Metropolitan Police, for me not to speculate about the inquiries which they are pursuing with the utmost vigour.
Mr. McWhirter was a well-known figure, outspoken and courageous. I am sure the whole House will wish to join me in expressing our deepest sympathy for his widow and family, and our condemnation of this utterly barbaric crime.

Mr. Berry: I thank the right hon. Gentleman for those remarks and particularly for his expression of sympathy. Is he aware that I find it almost impossible to believe that I am asking a Private Notice Question about an assassination in what I thought was a peaceful North London constituency? Is he aware that we will all wish to agree with his expression of the deepest possible sympathy to Mr. McWhirter's widow, Rosemary, in front of whom I believe this terrible crime was committed, their two sons and the other members of his family, particularly his twin brother, Norris, with whom he was so closely associated in many enterprises. All of those enterprises had a consistent theme—their attempts to help the interests of one section of the community or another that was in need of such assistance.
While I appreciate that he does not want to go into detail, the right hon. Gentleman will be aware that the media are already blaming the Provisional IRA for this crime. Perhaps he could refer to that. What is the Government's position about the fund that Ross McWhirter launched, which must have had something to do with this terrible crime?
May I refer the right hon. Gentleman to his own remarks in the last 48 hours? On Wednesday he said that he would not hesitate to introduce any further measures to defeat terrorism. I wonder whether the time has not come for certain measures. Is it still the right hon. Gentleman's view, as he expressed it yesterday, that the death penalty would not reduce the danger of terrorism? Unhappily, those words have been proved wrong only a few hours after he said them. I do not believe that my constituents or the majority of people in the country would agree with him.
Finally, would not the right hon. Gentleman agree that this assassination—it is no less than that—has added a new dimension of crime and terrorism to this part of the United Kingdom? Should we not all join with a new purpose in defeating it? Will the right hon. Gentleman think very carefully over his words of the last 48 hours and give the lead which I believe the whole country calls for at this moment?

Mr. Jenkins: I fully understand the deep feelings of the hon. Member, which to a large extent I think we all share on this occasion. As for the further measures, I said on moving the Second Reading of the Prevention of Terrorism (Temporary Provisions) Bill that my mind was never closed to further measures which I believed would be both effective and practical. We start to debate the detail of that Bill in the near future. I shall listen with great attention to anyone who has measures to put forward and will consider carefully with my advisers whether there are further measures that we can take.
As for the death penalty, that is clearly an issue on which there are deep feelings and I respect those who have a different point of view from mine. My view, and I believe that of the overwhelming majority of the House, is based entirely upon our different judgments of what can


best help to prevent and reduce violence. It is not a difference between guts and softness. I have no respect for softness in present circumstances. I have no sympathy whatsoever with those who commit these bestial crimes, and if they were shot in the act I would have no sympathy with them of any sort at all.
It is entirely a question of what, on the basis of the best judgment we can make, is most likely to reduce violence in future. It is a fact that nearly all of those who have been concerned in highly responsible positions with law and order on both sides of the House, both in Northern Ireland and here, take a view which is different from that of some hon. Members and may be different from that of the public. We must always consider our view and consider whether it is right, but that view, if honestly held on the basis that I have put forward, is entitled to respect, just as is the opposite point of view.
It is important that when confronted with this sort of threat, and while we can have honest differences on how best to combat it, we should not allow those differences to endanger the nerve, judgment, calmness and lead that we can give to people to combat these acts by measures upon which we are all agreed.

Mr. Graham: As the Member for the neighbouring constituency of Edmonton, and my home being just a few hundred yards away from that of Mr. McWhirter where the shooting took place, I should like, on behalf of my constituents, to express their sense of shock and anger at the tragedy which has taken place. I met many of my constituents this morning. On their behalf I should like to be associated with the expressions of sympathy which have been so ably and eloquently expressed by the hon. Member for South-gate (Mr. Berry)

Mr. Jenkins: I thank my hon. Friend for those remarks.

Mr. Thorpe: I should like, on behalf of my colleagues, to express our utter horror at this tragedy and extend our profound sympathy to Mr. McWhirter's widow and family.
Will the right hon. Gentleman consider whether we are sufficiently sensitive in assessing those amongst the public who stand in need of some protection? Is he

aware that judgment may show that perhaps Mr. McWhirter was already a fairly well-known target? Will he consider whether it might be necessary to be more sensitive? I am not saying that anyone is to blame, because this is a new situation However, I believe that we should look at this aspect, because many people may be in grave risk of danger.

Mr. Jenkins: I have this thought very much in mind, as I must, in relation to the capabilities of the police which, despite substantial increases in strength recently, are necessarily limited. Clearly we must take account of the possibility that this is the beginning of a new form of attack which we have not hitherto seen, at any rate in Great Britain. I assure the House that the police will take full note of this possibility.
It would not be right for me to announce all operational plans which the police may have in hand. The House may recall that an important plan last Friday was nullified by publicity in a newspaper during the afternoon. I hope that the House will not expect me to say more.

Mr. Powell: What is the nature of extent of ministerial responsibility which either requires or permits the Home Secretary to answer a Question in this House upon an individual crime, at any rate at this stage?

Mr. Jenkins: I think that must be a matter for you, Mr. Speaker.

Mr. Powell: No.

Mr. Speaker: This is a question for my discretion.

Mr. Powell: No.

Mr. Hugh Fraser: I appreciate that the Home Secretary does not wish to be drawn at this stage on the cause of this assassination, but will he seriously consider with his colleagues responsible for the government of Northern Ireland whether at this time it is appropriate still to be releasing from detention people over whom there is a scintilla of doubt as to whether they are members of the IRA? Will he consult his right hon. Friend the Secretary of State and report back to the House whether there is a so-called truce in Northern Ireland and whether this truce is being observed by


only one side—the British Government? Whilst this country is now imperilled, not merely in Northern Ireland but here, by what seems a new wave of IRA terrorism, would it not be wise to delay further releases from detention until the right hon. Gentleman can make a further statement on whether this was an IRA assassination?

Mr. Jenkins: I am constantly in contact with my right hon. Friend the Secretary of State for Northern Ireland on this and other matters. I believe that in his policy he bears fully in mind not only the need to try to secure a political settlement and abatement of violence in Northern Ireland but the possible consequences here. I shall continue to keep in touch with him on this matter.

Mrs. Thatcher: I am grateful to the Home Secretary for answering this Private Notice Question this morning. I know he will realise that we on this side of the House feel particularly deeply about this matter, because we knew Ross McWhirter well and admired him a great deal. He was one of the finest people of his generation. He was never timid or passive about his belief in liberty. He was active each and every day in protecting and preserving individual liberty. The terrorists may have killed him and others, but we are concerned that they must never conquer that indomitable spirit of unhesitating courage without which freedom would perish.
I am grateful to the right hon. Gentleman for his assurance that he will look at all measures against terrorism everywhere. Everything that he can do both to deter the terrorist and to protect the law-abiding citizen will have the full support of the Opposition.
Is the right hon. Gentleman aware that we accept what he said about the death penalty being a personal matter? I accept that it is a personal belief. I believe that those who have committed this terrible crime against humanity have forfeited their right to live. Others—there are some on the Opposition Front Bench—personally believe that that is not the right view, but many would take the view that those who commit such a crime should at least forfeit their right to live at liberty for the rest of their lives. The important thing is that we should take measures both to deter the terrorist and to

protect the law-abiding citizen, and, above all, to beat the gunmen. I hope that those who believe in freedom will now come forward in larger numbers to show the same kind of courage as Ross McWhirter showed and for which he and his wife and family have suffered.

Mr. Jenkins: The right hon. Lady has paid a remarkable tribute to Ross McWhirter, whom I did not have the pleasure of knowing. Clearly he was a remarkable man, with whom I would not always have agreed but whom one could easily have admired. I greatly understand the way in which the right hon. Lady spoke about him. I also appreciate the general tenor of her remarks.
There is only one comment which I would add. I do not think that our attitude to the death penalty should be seen as a matter of the personal conscience of any one of us. If I thought that it was purely a question of my personal conscience, I would believe it to be entirely wrong to put this before something which would help us to conquer this horror. It is not a matter, in my view, of personal conscience. That would be to take far too self-regarding a view of the situation. We all in our different ways, respecting each other's point of view, owe the nation our judgment on how we can best protect it in these dangerous circumstances. While we can and will have arguments in this House, I believe that, as the right hon. Lady made clear by the tenor of her statement, we should try to maintain a general united front in this House against the horror of the terrorist to which we must not submit.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. We must leave the matter there.

Mr. Powell: On a point of order, Mr. Speaker. The words which fell from you a few minutes ago may have conveyed the impression that it had been my intention to challenge your decision or responsibility in the selection of a Private Notice Question. I should like to say that that was in no way implicit in what I said. I fully accept, as should every hon. Member, your undivided responsibility for permitting an hon. Member to put a question by Private Notice. But you have equally made it clear on many occasions.


that what a Minister says or whether he says anything at all in answer to such a Question is entirely his responsibility. I hope that you will forgive me for putting on the record the fact that I was in no way challenging your ruling or your rights.

Mr. Speaker: I am obliged to the right hon. Gentleman.

BILL PRESENTED

CROFTING REFORM (SCOTLAND)

Mr. Secretary Ross, supported by Mr. Hugh D. Brown, presented a Bill to confer new rights on crofters and cottars to acquire subjects tenanted or occupied by them; to confer rights on crofters to share in the value of land resumed by landlords or taken possession of compulsorily; to protect the interests of crofters and cottars from planning blight; to make further provision as to financial assistance for crofters, cottars and certain owner-occupiers of certain land; to make further provision as to the removal of land from crofting tenure; to amend the law with respect to common grazings; to extend the powers of the Scottish Land Court; to make provision for pensions and compensation for members of the Crofters Commission; and for connected purposes; and the same was read the First time; and ordered to be read a Second time upon Monday next and to be printed. [Bill 14.]

Orders of the Day — OECD SUPPORT FUND BILL

Order for Second Reading read.

11.20 a.m.

The Minister of State, Treasury (Mr. Denzil Davies): I beg to move, That the Bill be now read a Second time.
This short Bill is necessary to enable the United Kingdom to participate in a Financial Support Fund which has been set up by the Organisation for Economic Co-operation and Development. An Agreement establishing this Fund was signed in Paris by the members of the OECD on 9th April and 30th May this year. The fact of the signature was announced by my right hon. Friend the Chancellor of the Exchequer to the House on 9th April and the text of the Agreement was published as a White Paper on 5th October. The Bill gives legislative force in this country to that Agreement.
The Agreement will come into force and the Fund starts to operate when member States with quotas representing 90 per cent. of the total of the Fund have deposited instruments of ratification. We have therefore an obligation to our partners in OECD and it is in our own interests as a nation to complete the legislative processes leading to ratification as soon as possible, even though the Fund is intended as a "safety net", which OECD members are not likely to need to use unless other sources of borrowing are not available.
Perhaps I can briefly recount the history behind the setting up of the Fund. As hon. Members will know, one of the major problems caused by the oil price rises of autumn 1973 to summer 1974 was the problem of financing the massive balance of payments deficits which resulted from the oil producers' limited capacity to absorb imports from the industrialised countries. This problem was aggravated, first, by the danger that the oil producers' pattern of investment for their hugh surpluses would not correspond to the pattern of deficits caused by the oil price increases and, second, by the very real threat to the stability of world financial markets caused by the massive potential accumulation of claims in the hands of the oil producers. Both these dangers meant that individual countries, through no fault of


their own, could find themselves faced with acute financing difficulties.
These were the reasons lying behind the numerous proposals which were considered in the international financial community in 1974 for coping with the problem of "recycling" what came to be known as petrodollars, and they are the reasons lying behind the agreement to set up the OECD Fund. It is, of course, true that up to now the world economy and the international monetary system have in some respects coped surprisingly well with all these problems and, as the capacity of the oil producers to absorb imports improves, the magnitude of the problem may be decreasing. But the danger is still with us. We are still in the depth of the world recession created by the oil crisis.
A large part of the world, including a number of industrialised countries, faces the prospect of having to finance substantial balance of payments deficits for some time to come and the need still exists for facilities to enable countries to adjust to the new situation without having to adopt measures which might correct their balance of payments but would lead to delay in their recovery and further deepen the present world depression.
As I said, the Fund is based upon an Agreement between the countries concerned, and the Bill gives legislative force to it in this country.
The purposes of this Fund are to assist member States which are facing balance of payments difficulties as a result of the oil crisis by giving them access to multilateral credit facilities. The Fund was conceived as an addition to existing sources of credit; it is a condition of eligibility for borrowing that an applicant member should demonstrate to the Governing Committee of the Fund that it has made the fullest appropriate use of its reserves and credit from other sources.
I should here explain that what is envisaged is not a fund in the sense of another international institution with its own resources, but, rather, a fund providing a facility whereby moneys raised will be immediately lent on to the member State in response to an application from that member State.
The total amount laid down in the Agreement which can be raised by the Fund, to be lent out to other member

States, is 20 billion SDRs or 24 billion United States dollars, determined by the quotas set out in the Agreement. The quotas establish the maximum liability in sharing risks and the normal proportions of contributions to assist a borrowing member. The United Kingdom's share in this is 1,600 million SDRs—that is £917 million at current market rates. This is 8 per cent. of the total of the Fund.
A member wishing to borrow must demonstrate two things to the Committee. It must show the Committee that is is encountering serious external financial difficulties, and that it has made the fullest use of its reserves and other forms of credit.
The Support Fund then raises the necessary finance and determines the terms and conditions applying to that loan. The only terms specified by the Agreement are that loans will be subject to economic policy conditions to be agreed between the borrower and the Governing Committee, and that the loans shall last for not more than seven years and be in convertible currencies of the contributing member's choice—they could also be in SDRs.
The amount of the loan will be related to the borrower's quota and will depend on the voting support given to the proposal by the other members. A member can draw up to its full quota on a two-thirds' majority of voting members; over the full quota and up to twice the amount of quota would require a 90 per cent. majority, and a request for borrowing more than twice a member's quota can be agreed only if all other OECD members are content. Voting is weighted according to quota.
Faced with a request for loans from a prospective borrower the Support Fund can raise money in a number of alternative ways. It can call on members to make individual contributions or it can borrow on a collective undertaking provided by all the OECD members. If the Support Fund calls for individual commitments, contributing members have two options. A member may either transfer moneys directly to the Fund, or provide an undertaking or guarantee for a Fund borrowing. In the case of a guarantee, the Fund will seek to raise the money in international or domestic financial markets first, and if it is unable to do so, the sum required may then be


raised in the domestic market of the individual member. The purpose of providing an individual guarantee is that the member undertakes to stand behind the Support Fund's obligations to lenders in general.
The Support Fund may choose to borrow on the basis of a collective guarantee. For this it can choose either domestic or international markets, so long as these markets are within the territories of OECD members. All members participate in such a collective guarantee and the contingent liability on them is determined by the proportion of their quotas in the Fund applied as a percentage to the total amount raised in this way. For example, if the Support Fund raises $100 million, the United Kingdom would underwrite 8 per cent. of this so that, if there were a default by the borrower, we should be paying from the Consolidated Fund interest payments and capital repayments on $8 million. To offset against this, of course, would be the claim we should have against the defaulting borrower, but it is extremely unlikely that any OECD member would default from an international borrowing obligation.
Provision exists in the Agreement for members in balance of payments difficulties to be relieved of or be assisted to meet their obligations under the Fund. In practice we believe that the Governing Committee would take account of the external position of member countries when making calls to lend on to other members, and seek to raise money in those countries and those markets which are best able to support the financing involved.
Having tried to recount briefly the actual Agreement, perhaps I may turn to the Bill and deal with three of the main clauses. The first clause and the last clause are really only descriptive, and I need not go into them in detail. It is only Clauses 2, 3 and 4 which make changes in existing United Kingdom law.
Clause 2 provides that if the Support Fund seeks to raise money under Article 8 of the Agreement by making a call for individual commitments from OECD members, the United Kingdom may respond to this call by making a direct contribution. The clause specifies that the source of that direct contribution shall be the National Loans Fund. Subsection

(2) provides that payments of interest, repayments of capital and any other receipts arising from a direct contribution to the Support Fund shall be paid back into the National Loans Fund. The NLF will also receive any moneys due to the United Kingdom when the Support Fund is liquidated.
The Support Fund will be liquidated under Article XIX when the last repayment or outstanding loan has fallen due. This could be after nine years, because the Fund has power to grant new loans for two years after the Agreement comes into force and loans cannot have a maturity of more than seven years. Liquidation, of course, may take longer than this in the event of possible deferments and default. Alternatively, there is provision for the members of the Fund to extend the facility if all members agree to do so.
Clause 3 provides that if the United Kingdom responds to a call for individual commitments under Article VIII by opting to give an undertaking by way of guarantee of the borrowing, or if it participates in a collective undertaking by all OECD members, as provided for in Article IX, any moneys required to implement such guarantees shall be paid out of the Consolidated Fund, and the Consolidated Fund will take in any consequential receipts.
If the United Kingdom is required to give an undertaking under either Article VIII or Article IX of the Agreement, the Treasury must lay a statement of the undertaking before each House of Parliament.
Finally, I turn briefly to Clause 4. This clause extends to the Support Fund those immunities and privileges which cannot be provided by Order in Council under the International Organisations Act 1968. For those, a draft Statutory Instrument will be laid before the House for affirmative resolution. The Statutory Instrument will provide that the Support Fund shall have the legal capacities of a body corporate, that is, it shall have the usual legal immunity, that its archives will be treated like that of a diplomatic mission and that the Fund shall have the tax exemptions as are accorded to a foreign sovereign Power. Hon. Members will, of course, have an opportunity to debate the draft instrument after it is laid before the House.
Clause 4 also covers tax exemptions which are not within the scope of the International Organisations Act, and relates to the securities issued by the Support Fund. In effect, it provides an exemption for non-residents from income tax in respect of these securities. Also, securities issued by the Support Fund are to be treated as property outside the United Kingdom for the purposes of capital gains tax and capital transfer tax. Again, that affects people domiciled outside the United Kingdom and not those who are in the United Kingdom. There will be an exemption from "Bearer Instrument" stamp duty in relation to Fund securities.
As we believe that the United Kingdom is most likely to meet its obligations to the Fund by providing direct financing, it is unlikely that the Support Fund will wish to issue securities in the United Kingdom. We have, however, to take the powers in Clause 4 so that, if such a remote eventuality arises, the Support Fund is not disadvantaged because we have not taken these powers.
In conclusion, as I have said, this is a short Bill, and I hope that it is uncontroversial. It is another attempt by the industrial countries to alleviate a little the consequences of the steep rise in oil prices which has taken place over the last four years and to mitigate somewhat the effects of the present world recession. Both of these aims, I believe, must be in the interests of this country, and I hope, therefore, that the House will agree to give the Bill a Second Reading.

11.33 a.m.

Mr. David Howell: I shall come in a moment to the details of the short Bill, but there is a place for a few preliminary remarks on the attitudes and economic thinking that he behind arrangements of this kind. It has been observed that if our problems could be solved by the sheer volume and number of credit facilities and swop arrangements that have been set up, we should be well on the road to recovery, but, unfortunately, they cannot.
The arrangements and the Bill are part of an attempt which Western Governments have decided, in their wisdom, to make to manage their payments deficits arising particularly, but not exclusively, from the substantial rise in the cost of oil imports.

Like all arrangements of its kind, it assumes that the Government have the ability to overcome all the instabilities caused by ups and downs in current deficits and capital flows as a consequence of a sharp rise in the cost of oil imports or any similar impulse. The claim is that Governments can do better than these forces would do if left to themselves.
That is a big assumption, and I am sure that the Minister of State is the first to recognise it. I am sure that he and his colleagues, therefore, approach arrangements of this sort, and the United Kingdom's involvement in such arrangements, with some caution. I certainly do. I feel it necessary to say that from the Opposition Benches, because we sometimes get the impression that the Chancellor has an almost blind faith in the power of such arrangements and of the act of borrowing to anaesthetise the pains of readjustment or to overcome the need for readjustment. It is right to put formally on record that when involving ourselves as a nation in arrangements of this sort we need to approach them with considerable caution and not with a glowing faith that in borrowing arrangements of this sort the answers to our problems lie, because they do not.
The Bill seeks to legislate in relation to lending by the United Kingdom and to authorise us to participate in the support for the new Fund. That is curious, because in the House nowadays we are more accustomed to talk about borrowing rather than lending. But here lending is involved, and we are required to be prepared to make a contribution of up to £1,600 million in special drawing rights. In the Annex to Cmnd. 6242, which sets out the Agreement, appears the table of quotas expected from member countries. Our quota is £1,600 million. The quota for the Federal Republic of Germany is £2,500 million, for Japan it is £2,340 million, and for France £1,700 million—a slightly humiliating reminder that a nation with a smaller population and a smaller labour force is now a richer country. Those are the categories that have been decided, and that is the quota that we shall be expected to meet.
The Bill allows for our quota to be met either through direct support or through Government guarantees for loans raised in the United Kingdom market. The explanatory document asserts how unlikely


it is that the quota will be met through further guarantees for loans and how al most certain it is—as the Minister of State confirmed—that we shall meet the additional burden through direct support from the National Loans Fund. That is not surprising. We should have been amazed to hear any other view asserted. In view of the state of Government debt and public sector borrowing it would be strange for the Government to suggest that more money should be raised in that way.
If the Government met their quota through a direct handout from the National Loans Fund, in the end their problems would be thereby increased by that amount, and they would still have to face the choice of how to get the revenue to fill the hole, whether by further borrowing, taxation, or printing money. In the present state of affairs an additional borrowing liability placed on the Government would be a sensitive and risky liability to take on. It is, therefore, no surprise to us that both the Minister of State and the supporting documents hurriedly assert how unlikely it is that any further guaranteed borrowing will take place to meet this quota.
By giving a Second Reading to the Bill and passing it into law in due course we undertake to meet our quota. The question which then has to be put is: what do we, as a country, get in return?
The Minister of State reminded us that this arrangement was christened the "safety net". He pointed out, rightly, that this is because it is regarded as the last in the line of the various swop facilities and credit arrangements which have been set up. It is the one to which countries are supposed to turn, on a number of conditions, of which one is that it should be used after all other multilateral facilities have been drawn on to the full. I think that is one important condition.
The other important condition, to which I do not think the Minister of State referred—it is strange that he did not, because it is the No. 1 objective of the whole Fund—is to
avoid unilateral measures which would restrict international trade or other current account transactions, or which would artificially stimulate visible and current invisible exports.
That is apparently the No. 1 condition upon which the Fund was set up. I want

to say a little on these matters, on the other multilateral facilities, and on the need for the avoidance of unilateral restrictions on trade.
On the other facilities, this is the occasion to ask the Minister of State, should he speak again in the debate, to give us a little more information about the other facilities. What are the other loan facilities now remaining open to this country? One sometimes feels that there is less openness on the full extent of our existing indebtedness and our possibilities for further resort to borrowing than one might expect in this House.
What is the position now? The list of published other multilateral facilities that I have before me includes the IMF General Account. I think that we made an application to borrow £400 million from the General Account, the limit being in the region of $3·3 billion. There is the IMF 1975 oil facility. We have applied to borrow £575 million from that. There is the $3 billion United States' Federal Reserve swop line. I do not know how far we are into that, or what the position is there. There is the OECD Support Fund, which we are now discussing, to which we are expected to make a quota contribution of up to £1·6 million in special drawing rights. There is the EEC Joint Borrowing Scheme. It would be useful to know where we stand in relation to that. There is the whole of our existing outstanding amount of foreign currency loans to the public sector, which I calculate—the Minister can perhaps confirm this figure—is in the region of $9,500 million, on which, presumably, we have to meet a very substantial annual interest rate. My own calculation is that that is in the region of $900 million a year.
Those are the other facilities. As the Minister of State mentioned those other multilateral facilities, it is right that we should have some more details on the question whether we are going to make use of those at the moment. I would not expect him to predict the future too closely, but we should like to know a little more on that point.
Let me come to the second aspect—the prime objective and condition of the Fund; indeed, almost the basis upon which it was set up. I repeat that I find it odd, to put it at its mildest, that the Minister of State made no mention


of this No. 1 objective of the Fund which I earlier read out. The newspapers are full of stories about impending announcements of selective import controls, and it would be the height of cynicism if we were asked, this morning, to slip through Parliament this little Bill, one of the key conditions of which is that we avoid unilateral trade restrictions, at the moment when the Government were planning to announce unilateral trade restrictions. What the true position is I do not know. The Prime Minister has played his part in obscuring it, as usual.
In the Financial Times of this morning there is an interesting story by the Washington Editor, in which he makes some points that are germane to this condition laid down in the Agreement, in Cmnd. 6242. These comments were as follows:
Over the past few days high-level and strongly worded representations have been made to British embassies in Washington, Tokyo and a number of Common Market capitals warning of the damaging precedent such controls"—
referring to import controls—
would create and the serious diversionary effect they could have on world trade.
The article continued:
The Americans are particularly annoyed at the way Mr. Harold Wilson, the Prime Minister, claimed that controls had been endorsed by the Rambouillet summit meeting. They maintain that no such endorsement was given and that Mr. Wilson twisted an innocuous remark by Mr. William Seidman, the White House economic councillor, to give the impression that President Ford was acquiescing.
That is very surprising to hear—the Prime Minister actually twisting words. What a thing!
The report continued:
The American position at the moment, which appears to be very similar to that taken by Japan—is that the 'Rambouillet communique specifically reaffirmed the pledge the major countries had already taken in the OECD' is to refrain from protective trade measures. Any British import controls, whether justifiable under GATT or not would be highly undesirable in the present world situation, and a breach of the spirit of Rambouillet.
Where are we? We are here this morning discussing a Bill which depends, as a matter of good faith, upon the No. 1 condition that we avoid unilateral measures. Yet here are the newspapers, full of the most loaded and worrying reports, when we are just about to break

that condition and introduce unilateral trade restrictions. I do not know whether the Minister of State knows anything about this, or whether he is going to say that it does not arise. In fact, it does arise. It is central to this Bill and we must have some reassurance from the Treasury on the precise position, because otherwise we, as a House of Commons, will be placed in a most ambiguous situation in relation to this measure.
Those are the remarks I want to make on the details. Let me now make a general remark on the Bill as a whole and return to something that I was saying earlier. Borrowing through facilities of this kind, or exchange rate intervention, cannot be a substitute for correct internal policies. I hope no one in the Treasury imagines that they can be. Our view on the Opposition side of the House is that the correct internal policies are not yet being pursued and that until they are pursued all the credit arrangements, swop facilities and other devices which can be set up in the Western world cannot solve our problems. It is in that spirit that we look at this Bill.

11.49 a.m.

Mr. Denzil Davies: With the leave of the House, I should like to deal with the point raised by the hon. Member for Guildford (Mr. Howell) and, indeed, agree with some of his latter remarks as well as some of his first remarks.
We do not see the Bill as a solution to our deep economic problems. I wish it were as easy as that. By passing the Bill and joining in the Agreement with other OECD countries, however, we can solve our economic problems. We shall not solve them by general borrowing or through external factors. We shall solve them only by our own hard work and our economic policies.
The Bill sets up a facility. I remind the hon. Gentleman that it is, not only we, not only the United Kingdom, who are setting up the Fund in order to borrow from it. This Fund concerns all OECD countries, like the United States, Germany, Japan and France. The Fund, in fact, was a response to a very difficult international situation caused by factors fully outside the control of the Western industrialised nations, and they decided to get together to try to alleviate some of the consequences of that situation. But


that will not solve the problem either, since so many of these matter are outside our control. None the less—I am sure that the hon. Gentleman agrees—I regard the setting up of this Fund as a worthwhile attempt to come together and try to ensure that, in circumstances of this kind, we do not indulge in panic measures and that we do what we can to resolve the imbalances.
The hon. Gentleman asked me about the powers under the Agreement, and he read from the preamble to the Agreement relating to the restriction of trade between countries. The United Kingdom, as we have repeatedly said, subscribes to the view that general world trade is of benefit to this country. We are a trading nation and we rely upon general international trade to benefit our economy. We hope that there will be an upturn in the world economy fairly soon, and we hope also that we shall be able to take advantage of it. Therefore, I see nothing in the preamble to the Agreement which does not conform to the British Government's views on these matters.
We are not borrowing money from the Fund as a result of the Bill. We are merely entering—not just the United Kingdom, but all these countries—into a safety-net facility of last resort with our partners in the OECD. The terms of any agreement for borrowing money which might be reached between a member country and the Fund will be open for negotiation between that member country and the Governing Committee of the Fund.

Mr. David Howell: I was not referring to the condition for borrowing money from the Fund. I referred to the objectives of the Fund and, in particular, to the first objective. By the Bill we are asked to give our approval to participation in the Fund and, accordingly, in the pursuit of the objectives of the Fund. The No. 1 objective is to encourage and assist members to avoid unilateral measures which would restrict international trade. There is no ambiguity in that, and the Minister of State must accept it at its face value.

Mr. Davies: Indeed, we are members of the OECD and I acknowledge at once that the words of the preamble to the Agreement state one of the fundamental principles of the OECD. We do not resile

from that. I was merely making the point that there has not been any application yet from any member State to borrow from the Fund since the Fund has not been set up. If there were an application, these matters would be decided between the member country and the Fund in the light of circumstances at the time.
The hon. Gentleman asked about newspaper reports, and he spoke of various stories in the Press. There are always stories in the newspapers, and I do not think that the hon. Gentleman can expect me to comment on reports and rumours published in the Press about various meetings between Finance Ministers, Prime Ministers, Foreign Ministers, civil servants or any other group of people. I am sure he does not expect me to do so. The United Kingdom has made clear that we want to see an upturn in world trade. It is in our interest that there should be such an upturn. We hope that it will start next year and we hope that it will enable us to sell more of our goods abroad, which is in our interest as a trading nation. I cannot say more than that.
I repeat that the Bill represents a welcome attempt by the industrialised nations to come together to meet what was an external threat, a threat by primary producers to the industrialised countries. It was a grave threat, and this is an attempt to mitigate and alleviate the consequences. It will not solve our problems, nor will it solve the problems of the Western industrialised nations. But at least it is an exercise in co-operation to try to overcome the difficulties and bring us back again to the path of economic recovery, not only for the United Kingdom but for the whole of Western Europe and the Western world. I ask the House to give the Bill a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Miss Margaret Jackson.]

Committee upon Monday next.

OECD SUPPORT FUND [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to enable effect to be given to


an international agreement establishing a financial support fund of the Organisation for Economic Co-operation and Development, it is expedient to authorise—

(a) the payment out of the National Loans Fund or the Consolidated Fund of any sums required for the purpose of making payments in pursuance of the said agreement;
(b) the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Denzil Davies.]

NORTHERN IRELAND (LOANS) BILL

Order for Second Reading read.

11.55 a.m.

The Minister of State, Northern Ireland Office (Mr. Roland Moyle): I beg to move, That the Bill be now read a Second time.
I shall first outline the technical need for the Bill, but I recognise that right hon. and hon. Members may wish to raise questions on it, in which event I shall be glad to have the opportunity to speak again in reply.
The Bill is essentially technical and provides merely a piece of financial machinery. It does not itself authorise any expenditure; nor does it affect the policies behind the programmes which it will help to finance. It merely ensures that, when certain programmes of capital expenditure have been approved by the normal procedures, the money for them can be made available.
There are a Northern Ireland Consolidated Fund and Northern Ireland borrowing powers constitutionally separate from their counterparts in Great Britain, although at present, of course, both those pieces of financial machinery are under the control of my right hon. Friend the Secretary of State for Northern Ireland.
All expenditure on transferred matters in Northern Ireland is financed out of the Northern Ireland Consolidated Fund. This obtains most of its funds from revenues. The Northern Ireland Consolidated Fund also obtains smaller sums by borrowing from various sources, of which the National Loans Fund is by far the most important. The Bill is concerned solely with loans to the Northern Ireland Consolidated Fund from the National Loans Fund.
Since 1970 such loans have been made under the Finance Act 1970, as amended

by the Northern Ireland (Financial Provisions) Act 1972. The maximum gross total which can be lent to Northern Ireland under this legislation is £450 million, and it is essential to make provision for further loans before this limit is reached, which will probably happen at about the end of the current financial year.
Loans from the National Loans Fund are by far the most important source of long-term borrowing by the Department of Finance for Northern Ireland. But the Department raises money also in other ways—for instance, by the issue of Ulster savings certificates and development bonds and from the Trustee Savings Bank—and the more local savings that can be attracted the less will be the call upon the National Loans Fund. Hon. Members should note also that Northern Ireland people invest in United Kingdom national savings, such as the National Savings Bank and premium bonds, and in British Government stock. Northern Ireland therefore feeds the National Loans Fund as well as drawing from it to some extent.
The House will wish to be informed of the use made of the money provided under the Bill. Capital expenditure for Northern Ireland, like that of Westminster Departments, is financed out of current revenue, not by borrowing. But the Department of Finance borrows for the purpose of lending to public sector bodies outside central Government for approved capital expenditure. A small proportion of this lending is to the Northern Ireland Finance Corporation, which the House will be able to discuss when the forthcoming Order on the NIFC is debated, and a little goes to district councils. The lion's share, however, goes to the Northern Ireland Housing Executive and the Northern Ireland electricity service.
The Housing Executive is the public sector housing agency for the Province and currently provides about 165,000 dwellings. Its annual borrowing needs currently total some £80 million at today's prices. Hon. Members will, I hope, shortly have an opportunity to discuss Northern Ireland's housing problems in some depth in the Northern Ireland Committee. The capital needs of the electricity service are also substantial. Within the provision for Northern Ireland in the White Paper on Public Expenditure to 1978–79 there was provision for about


£200 million to be spent on the electricity service over the five-year period at 1974 survey prices. Most of the sums borrowed under the Bill will be loaned on these two bodies.
The Bill has three clauses, not including the Short Title. Clause 1 sets a new limit of £800 million on the total sums outstanding on loans from the National Loans Fund to the Northern Ireland Consolidated Fund, including those made under all previous enactments. These sums already total £525 million, and it is estimated that the limit of £800 million would be reached in about two years.
I stress that we are not actually spending money by this Bill but are merely providing the financial machinery for the total to be reached, if necessary. The Bill provides that the limit can be raised once by Order, subject to an affirmative resolution of this House, to not more than £1,000 million. If that happened, there would be another debate. This should prove sufficient for a further 18 months, so that the loans provided for in the Bill should meet Northern Ireland's requirements for about three and a half years from now, after which new legislation will be required.
The Secretary of State for Northern Ireland will make the loans with the approval of the Treasury. This is a departure from previous legislation, which was enacted before there was a Secretary of State for Northern Ireland. It is general practice for Ministers to act as lenders to nationalised industries and other public bodies operating in the areas of government for which they are responsible. It is in line with the responsibilities of the Secretary of State that he should in future act as lender to the Northern Ireland Consolidated Fund.
The loans will be made for the purposes of expenditure "of a capital nature". The Secretary of State will define what this phrase is to mean. In practice, it will no doubt continue to be restricted to lending to the various bodies I have already mentioned.
Clause 2 provides for loans made to the Northern Ireland Consolidated Fund under previous legislation to be repaid to the Secretary of State, who will in turn pay what he receives into the National

Loans Fund. This will ensure that payments of interest and principal on loans made under the old and the new legislation are all paid to the same account, making for administrative simplicity.
Clause 3 requires accounts of the sums received and disposed of under the Bill to be kept by the Secretary of State, examined by the Comptroller and Auditor General and laid before Parliament. This is the usual procedure in respect of lending by Ministers out of money issued to them by the Treasury from the National Loads Fund.
This is a non-controversial Bill, but it is part of the machinery through which capital works of real importance to Northern Ireland will be financed. I commend it to the House.

12.3 p.m.

Mr. David Howell: We are grateful to the Minister for setting out the position with regard to the Bill. Immense sums of money are involved and it is right that, at a time when extreme stringency is needed in public expenditure and when the national kitty is virtually empty, we should look very carefully at what is involved.
The Explanatory and Financial Memorandum tells us that the loans to be provided under the Bill are transfers within the public sector and do not constitute public expenditure. That is literally true, but it is a misleading statement. The decisions which give rise to the need for public expenditure to be carried out are made in another context on another occasion, but we have here a very important part of the process by which resources are pumped through and dispensed in accordance with the policy. We have to scrutinise this process very carefully. As with all money figures in the public sector, this has been zooming up over the years.
We are superimposing this legislation on the provisions included in Clause 1 of the Northern Ireland (Financial Provisions) Act, which raised the total amount which could be outstanding from the National Loans Fund to the Consolidated Fund from £200 million to £350 million. Further Orders raised it to £450 million and £500 million, and this Bill raises it to £800 million with provision for an increase to £1,000 million by


Order. These figures tell the same miserable story that is told in every other area of public expenditure and finance.
May I ask the Minister to expand a little more on the ways in which the loans dispensed from the Consolidated Fund are being used? He mentioned the Housing Executive and said that these matters would be debated in Committee, but can he tell us what progress is being made in the Housing Executive? In the past it has produced some disappointing results in relation to its targets for the replacement of the appallingly inadequate housing stock in Northern Ireland. It has been falling well short of the ambitious target of 17,000 new houses a year set in the 1970–75 development plan. Has there been any improvement now that it can borrow all this money?
The Bill also involves the Northern Ireland Finance Corporation. For reasons which seem to me quite irrelevant, it is to have its name and form changed to fit in with the Government's plans in the rest of the United Kingdom. Will there be any change in its practical functions, or will it be merely a question of printing a lot of new letterheads? Loans of public money on a substantial scale are involved in this corporation.
Are there any loans outstanding to Harland and Wolff through this mechanism? If so, can the Minister give us more information? The outlook for this shipyard is not encouraging and it would be absurd to pretend otherwise. It has been a continual drain on public funds by both subsidies and loans for a long time, and with world shipbuilding orders well down it is in an immensely difficult position.
I have no doubt that hon. Members from Northern Ireland will wish to raise more specific points arising out of the Bill, but I should like reassurance that the immense sums being channelled through the Bill are bringing as many benefits as we could realistically expect in the present difficult situation in Northern Ireland.
In the past it was our proud claim that, despite all the horror in Northern Ireland, its economy had been immensely resilient. I had some connection with these things a few years ago and we were very proud then both of the relatively small impact which terrorism had made on the loss of

jobs and of the development of industrial training. Some of the new techniques being used in Northern Ireland caused interest and much admiration in other parts of the world. We were proud in the time I was in Northern Ireland that the employment position improved and that the Government were able to help in a number of ways.
In the present situation unemployment in Northern Ireland has greatly increased, as it has done in the rest of the United Kingdom. Will the Minister tell us whether the growth of unemployment in Northern Ireland has been greater or less than in the rest of the United Kingdom? Is the regional disparity greater or smaller than it was last year? I always hoped that we could reduce the disparity, and I should be interested to know whether that reduction has been maintained.
The total Northern Ireland expenditure for the current year is estimated as £369 million under the Class XV Estimates. Perhaps the Minister will correct me or give any further information he has on that sum. This is the amount which is handed over in the form of a block grant plus a number of additional grants-in-aid for specific purposes.
I hardly dare mention devolution, so frequently is it on everyone's lips at the moment, but it is interesting that we are dealing here with an administration which still remains devolved. The devolved political government is in abeyance for reasons which we all know, but these loans and expenditures are being administered by the structure which is still devolved. Having worked with that structure, I have no hesitation in saying that it has many excellent qualities and I have the highest admiration for the Northern Ireland civil servants. The devolved administration had many virtues in terms of flexibility and co-ordination of effort. I realise that by saying this I am turning a blind eye to the more decisive and important point of devolution of political control. The Belfast administration and the Northern Ireland Civil Service have worked well. I hope that the Minister will tell us that they are still working well and efficiently in the present appallingly difficult circumstances.

12.14 p.m.

Mr. J. Enoch Powell: The Minister of State is right to remind


the House that this is an enabling, not to say a limiting, Bill. In passing it the House is making no decisions on actual lending or borrowing, or on expenditure. There may be in other respects policy decisions which it implies and to which the hon. Member for Guild-ford (Mr. Howell) alluded; but I hope to deal with that aspect later.
The successive predecessors of this Bill present a curious story. If I have the story at all correct and complete, it is, taking it from 1950, roughly this: after 15 years the limit was raised by £55 million; after another two years by £60 million; after another two years by £50 million; after another year, in 1970, by £150 million; after another two years by £350 million; and now it has been raised by £450 million. I am of course including in these calculations the amount which can be added to the limit by order of the Secretary of State under the successive Bills. That is a melancholy and grisly reminder, though somewhat irregular, of the progress of the apparently irresistible onward march of the giant Inflation, and the accelerated march of that giant during these years.
If any hon. Member should be so injudicious as to suggest that the large increase in the limit made by this Bill represents an undue weight of capital expenditure in Northern Ireland—I am hopeful from the emptiness of the Benches opposite that there may be no such injudicious observation—the Member who made it would be quite mistaken. I note that the last increase of £350 million, exhausted or nearly exhausted in two years, is not higher than the rate of capital expenditure for the previous year or two. I also note from the Minister of State's remarks that the increase of £450 million by this Bill will take about three years to catch up with, so that an average rate of about £150 million a year, in money terms, flowing out of the Fund has been the experience in the last few years and is expected to be the experience in the next few. Let no one therefore assert that Northern Ireland is absorbing an undue, still less an unduly increasing, proportion of the borrowing and the public capital expenditure of the United Kingdom.
As the Minister of State pointed out, we have opportunities—they may be

more or less adequate—to debate with more propriety than we can on this Bill the areas of policy which correspond to the major capital outlays that will be eventually made possible as a result of this Bill. My hon. Friends from Northern Ireland and I mean to make full use of those opportunities, either in Committee or on the Floor of the House. On this occasion, therefore, I do not need to deal with areas such as housing. Instead, I come to the Bill itself and to the real policy decision which, in a sense, it implies.
I want to put first a detailed question to the Minister which may save time and avoid putting down an amendment in Committee. I refer to Clause 2(2)(b), which gives the Secretary of State, with Treasury approval, the power to alter the terms on which existing loans are to be repaid and interest on them is to be paid. On the face of it, this would appear to be a very far-reaching and arbitrary power. I realise that in the case of almost all these loans they are already in terms where repayment and interest are dependent on Treasury direction—are already variable, indirectly or directly, by the Treasury. Nevertheless, I should like the Minister to make clear whether any other terms than those already so variable are rendered variable by Clause 2, and, if there are any, what is the justification for so surprising a provision and what limits are to be placed on it.
Turning back to Clause 1, it is a rather strange experience—almost an amusing one—to follow the nomenclature through the successive Bills which have preceded this one. In subsection (1) it is quite clear that the advances are being made to the Consolidated Fund of Northern Ireland. But when we look at subsection (3) we find traces of considerable variation. For example, in the 1950 Act the advance in the terms of the Act was to be made to the Exchequer of Northern Ireland, but the rubric in the margin referred to
Loans to the Government of Northern Ireland.
and that rubric has been followed by the explanatory words in brackets. Similarly, in paragraph (b), the 1970 Finance Act referred to loans to the Exchequer, but that is explanatorily described in the words within brackets as being
loans to the Consolidated Fund of Northern Ireland".


The Minister well knows that there is a real, not merely a technical, difference between Government, Exchequer and Consolidated Fund. Indeed quite a bit of the constitutional history, not to say the financial history, of Parliament is embalmed in the difference between the meaning of those separate expressions. I should be grateful if the Minister could shed a little more light than he did in his introductory remarks on these differences and the consequential variations in nomenclature.
The Minister, in opening the debate, did make one clarifying observation, when he said that the Consolidated Fund of Northern Ireland is the fund from which is met expenditure "on transferred matters." I take it that that means matters transferred under the old Stormont Constitution; but I should be glad if it could be explained whether it now means matters which would be transferred under the 1973 Act if the 1973 Act were still in operation—which, mercifully, that Heath-Robinson Act is not, and never will be again. So the Consolidated Fund of Northern Ireland has a certain historical existence. As the hon. Member for Guildford (Mr. Howell) pointed out, that historical existence is for the time being maintained administratively, and in a sense the one policy decision that the House is taking by the Bill is to maintain that existence, albeit limiting it to administration by the terms of Clause 1(1).
I now come to the one political observation, if I may be so bold, that I wish to offer on the occasion of the Bill. If there is one financial matter on which, so far as I know, all sections of political opinion in Northern Ireland are united, it is that they are not prepared to have public finance in Northern Ireland separated from the public finance of the United Kingdom generally. Putting the matter more precisely, they are not prepared to be told that because this House and the United Kingdom decide, for instance, to advance a sum of money to Harland and Wolff, the financial consequences of that decision are specifically to be borne by other forms of expenditure in Northern Ireland.
On the contrary, we say that the industry of Northern Ireland is an integral part of the industry of the United Kingdom, as Northern Ireland itself, in the terms of the Government's first Position

Paper supplied to the Constitutional Convention last year, is an integral part of the United Kingdom. We maintain that there is no more reason for a variation in expenditure on one head in Northern Ireland to have repercussions upon expenditure under the other heads in Northern Ireland than for expenditure in the North-East or in the South-West of England to have such local and specific repercussion.
We are wholly determined—whatever may be the general policy of the Government, and whether we agree with it or not—that the policy governing the industry of Northern Ireland shall be an integral part of the policy governing the industry of the United Kingdom. Putting that in financial terms, it is not merely a party determination but a general one that, so far as I am aware, all political sections in Northern Ireland are not prepared to be turned off with a block grant and told that that is what we are getting and that if this House, in its wisdom, or any other devolved administration, thinks fit to increase or emphasise expenditure on one head or another, room for that has to be found from somewhere else in Northern Ireland expenditure, as such. "Integral" means what it says, in financial and in all other respects.
Let me sum up the situation in this way: one accepts that the Consolidated Fund of Northern Ireland is a historical survival, but let it be no more than a historical survival. Let it not be the means or the symbol of a financial separation between Northern Ireland and the rest of the United Kingdom. In particular, let it not be the means of treating Northern Ireland differently from any other part of the United Kingdom by making Northern Ireland absorb increases of expenditure under one head which are required as a result of its circumstances or of the policy of Her Majesty's Government at the expense of other forms of public outgoings in Northern Ireland.
This Bill is no occasion, nor, perhaps, is such a packed House on a Friday the fit audience, for any lengthy constitutional reflections. Still, as the hon. Member for Guildford remarked, devolution is in the air: I suspect that it is a word that we shall find difficult to keep off our lips in many a surprising context. I found it somewhat ironical, in the light of the Bill, to read paragraph 111—which I


shall not exhaustively quote—of the devolution White Paper issued yesterday, which proposes to set up a Consolidated Fund Bill, or the equivalent of it, in Scotland, with a devolved administration and Assembly. That same paragraph includes, however, some important words, that are germane to this Bill. They are as follows:
However, the Government must control both the total amount of long-term borrowing and within this the total of borrowing from official sources by local authorities and public corporations. These controls are essential for the management of the United Kingdom economy.
In that sentence lies the unsolved, and, maybe we shall find, insoluble incompatibility between a unitary State—the United Kingdom—and a devolved administration responsible, beyond the limits of what we know as local government, to a locally-elected assembly.
Of course, it is an unreal distinction. The distinction between controlling the total of borrowing and controlling the items of borrowing is one the unreality of which was being explored by our predecessors in the House in the 14th century. It is an unreality which made the needs of the Crown and the borrowings of the Crown the foundations of the powers of the House and of our constitutional liberties in this country.
Immediately the theory is put into practice one finds that in controlling the total—in controlling "the total of borrowing from official sources by local authorities and public corporations"—one inevitably takes policy decisions about the size of this or that, about more or less in one quarter and more or less in another. If the decision upon the more or less, the this or that, is to be transferred elsewhere, it will be discovered that the control over the total will become either intolerably irksome or hopelessly impracticable.
We in Northern Ireland know very well that although part of the borrowing of Her Majesty's Government is for public purposes in Northern Ireland—that is what the Bill provides the machinery for—we, together with our fellow citizens in the rest of the kingdom, take the consequences of the administration of the public finances of the United Kingdom. There is no Northern Ireland inflation: there is

only a United Kingdom inflation. There is no Northern Ireland recession: there is only a United Kingdom recession. And so one could go on.
To be an integral part of the United Kingdom is to be affected equally with all other parts by the financial decisions which are taken. The sums which will be borrowed in order to make possible the advances eventually occurring under the Bill are part of the celebrated "net borrowing requirement" of the United Kingdom. We make no complaint of that; for, although inadequate in number, the parliamentary representatives of Northern Ireland share the responsibility for, and take part in the criticism of, the decisions which have led to that result. So I refer for the last time to my text, the Consolidated Fund of Northern Ireland. Let no one suppose that any part of the United Kingdom can be insulated from the consequences of the total management of the finance of the United Kingdom, and let no one be in any doubt as to the determination of Northern Ireland to share to the full, for ill or good, the fortunes of the United Kingdom.

12.33 p.m.

Mr. Moyle: I thank the House for giving me permission to speak a second time in the debate, which, although the House is sparsely attended, has given rise to a number of interesting points on which I can comment.
I should perhaps say first that the borrowing provisions of the Bill are related to a time factor. As time extends, so also does the necessity for borrowing money to meet public expenditure purposes in Northern Ireland.
Although the right hon. Member for Down, South (Mr. Powell) set out a dismal history of the fall in the value of money, and although he was to some extent supported by the hon. Member for Guildford (Mr. Howell), I assure the House that there is stringent scrutiny of all matters relating to public expenditure in Northern Ireland. That may have escaped the population there to date, because much of the present expenditure is expenditure for which approval was granted in the earlier years of his decade. Many of the public expenditure reductions, certainly reductions in the rate of growth, will not become apparent on the ground for some years. In the meantime,


it may well be that people in Northern Ireland are not aware of the rigorous control of public expenditure that is taking place.
I regret that we are not in a position to give the hon. Member for Guildford some of the statistics for which he asked concerning the Housing Executive. However, if it will help the debate on housing that I hope we shall have in the not-too-distant future, I shall write to him giving those statistics. We agree with the hon. Gentleman that housing is the prime social problem in Northern Ireland. In spite of public expenditure restrictions, we are determined to make the maximum possible contribution to solving the problem in the shortest period, but that means building up an industry capable of dealing with it. It is not simply a matter of providing money and saying "Go ahead". There is a great deal of other planning to be done as well.
The Northern Ireland Finance Corporation will have its name changed to the Northern Ireland Development Agency and its functions will change, bringing it into line with similar Agencies in Scotland and Wales. My right hon. Friend the Member for Salford, West (Mr. Orme) will shortly introduce the necessary Order. We believe that the Agency will be valuable in developing industry in Northern Ireland, which is another problem that we must try to solve.
Historically, the economy of Northern Ireland has been a little weaker than that of the United Kingdom, in spite of its close links with industry in Great Britain, both financially and organisationally, and unemployment has traditionally been higher in Northern Ireland. The hon. Member for Guildford asked what the current position was. Unemployment is still noticeably higher in Northern Ireland than in the rest of the United Kingdom.
I do not expect the inhabitants of Northern Ireland to be wildly excited about what I say next, but the fact is that unemployment there has been rising a little more slowly over the recent period of recession than in the rest of the United Kingdom. I presume that most people in Northern Ireland are more conscious of the fact that unemployment has risen than of anything else, but we have been taking Government action to improve the position and the Northern Ireland economy is showing slight signs

of being a little more resilient compared with the rest of the United Kingdom than it has been in the past. Although by now the unemployment level in Northern Ireland has risen by the same percentage as unemployment in Great Britain, it has taken longer to do so.
The hon. Gentleman also asked about Harland and Wolff. None of the money which it is proposed should be borrowed under the Bill is destined for Harland and Wolff. The Northern Ireland Finance Corporation has not provided money for Harland and Wolff. The £60 million provided for the firm has come from a Vote under the heading of the Department of Commerce. To this extent Harland and Wolff is outside the scope of the Bill.

Mr. Powell: In other words, that means that this is not treated for accounting purposes as a capital outlay?

Mr. Moyle: I would need notice of that question because it strikes me as being rather technical. It is not part of the borrowing machinery set out in the Bill. The source is totally different. It is a Vote of the Department of Commerce. The hon. Member for Guildford is right to say—it is no secret—that Harland and Wolff is in the same sort of difficulty as other shipyards throughout the world following the huge increases in the price of crude oil which took place from 1973 onwards.
The right hon. Member for Down, South—

Mr. David Howell: Since the Minister appears to be leaving my questions may I add one more, of a slightly technical nature? It may be that the reply will wing its way to him by some means before he sits down. In Clause 1(3)(b) of the Bill the various authorities are set out by which loans up to a limit of £450 million on the total amount advanced have been approved by this House. In the Explanatory and Financial Memorandum we learn that £525 million of these loans was outstanding as at 11th November 1975. Can the hon. Gentleman explain what authority covers the gap between £450 million and £525 million?

Mr. Moyle: We will do our best to answer that point.
Before leaving the subject of Harland and Wolff I should say that, although we


increased the amount of money available, some of the increased money was not extra to Northern Ireland expenditure. It was found by reducing expenditure on other aspects of Northern Ireland affairs. A great number of the Votes have to make some contribution to increased expenditure in Harland and Wolff.
I turn now to the points raised by the right hon. Member for Down, South. I would dearly love to follow him into his interesting and philosophical considerations of the problems of devolution. It would be unwise for me to do so. I have no doubt that the passages in his speech which alluded to this subject will be carefully considered by my right hon. Friend and others with responsibility in this area. The right hon. Gentleman's words will be carefully weighed in the eventual outcome of the discussions we are to have on this subject over the ensuing months. However, I had better restrict myself to the Bill.
There was one point which we might try to clear up. It concerns the impression we are under that the financing of Northern Ireland under any possible devolved Government would be on the basis of a block grant. That was what the report from the Convention proposed. It seemed to me, trying to follow the right hon. Gentleman—maybe I have got him wrong—that there was a slightly different gloss on this approach by the right hon. Gentleman. If that is so, he must reconcile his views with those of his right hon. and hon. Friends. If that is not the case, this is an interesting aspect of the problem that has not been noticed before.
On the assumption that a block grant is the favourite way of financing a devolved Government in Northern Ireland—I appreciate that this is not entirely relevant—there are one or two points I should make. First, the Government do not believe that any formula can be devised for calculating the size of a block grant without the need for some sort of political judgment. It is not possible to delegate to a nominated Exchequer Board, for example, responsibility for the distribution of resources among parts of the United Kingdom. Any Government at Westminster must remain responsible for resources allocation. I do not believe that the House of Commons would abdicate its responsibilities for voting money.
Second, the block grant is certainly intended to provide room for its recipients to decide their priorities without the need for constant Treasury supervision. It does, however, impose a constraint upon the recipients. A Northern Ireland administration financed by a block grant would have to live within that grant. This would not be a soft option. It could not look to the United Kingdom Government or to this House for further funds for new and additional items of expenditure in the course of the period for which the block grant was allocated, although it might be possible for inescapable cost increases to be offset. A block grant might be right. It might be a healthy discipline for Northern Ireland. It certainly would not be a soft option. If a Northern Ireland administration wanted an assurance that money would be provided for all its projects, whether or not they could be covered by a predetermined sum, the corollary would be detailed Treasury scrutiny of the expenditure.
I would not want to give the House the impression that the Government have taken a firm view on that or any other aspect of devolution at this stage. We will certainly study what has been said and hope that in turn the right hon. Gentleman will study what I have said.
On the subject of the control of Northern Ireland finances, we note what the right hon. Member says about separation from the United Kingdom. All I can say at this stage is that we are following the general tradition of Northern Ireland financing machinery as it has existed—with some variations, I concede—since the Government of Northern Ireland Act 1922 as subsequently modified.
The right hon. Gentleman was worried about some of the confused state of the nomenclature employed in the Bill. The relevant sources are Section 13(1) of the Northern Ireland Constitution Act 1973, since when there has not been a Northern Ireland Exchequer separate from the Consolidated Fund, just as there has not been such a separation in Westminster since the National Loans Act 1968. Even in the past, what the real difference was between the Northern Ireland Exchequer and the Northern Ireland Consolidated Loans Fund was a matter for some speculation. In any case, that has now gone.
The right hon. Gentleman drew attention to the side headings of previous legislation in which the provision was described as
Loans to the Government of Northern Ireland.
That was a shorthand and commonsense way of referring to the body of the section involved. Even the wording of the section referred not to the Government but to the funds under the Government's control. There is no need now to refer to the Northern Ireland Government or to the Northern Ireland Executive, but simply the need to refer to the Consolidated Fund out of which, by Northern Ireland statutes, loans can be made. I hope that that explanation combined with my opening speech will at least clear up the question of nomenclature and make life easier for some people.
I was asked about giving an assurance concerning Clause 2(2)(b). I can give that assurance in the terms in which the right hon. Gentleman sought it. The Treasury, and now the Secretary of State, has always had power to vary the terms of loans to be repaid to what will now be the Northern Ireland Consolidated Fund, but only by agreement with the person repaying the loan. Within those terms there can be a variation. There is no increase in variation over what has existed previously. It will be a matter for agreement between the Secretary of State and the person repaying the loan.
I have covered all the points that have been raised in the debate to the extent that I am in a position to cover them, and I commend the Bill to the House for a Second Reading.

Mr. David Howell: Mr. David Howell rose—

Mr. Moyle: I apologise to the hon. Gentleman. The piece of paper arrived while I was speaking. It says that the figure of £525 million refers to the total outstanding and that the sum of £450 million refers to the gross sum advanced under the 1970 Finance Act. That does not advance the matter a great deal. I think that I had better write to the hon. Gentleman and see whether I can clarify the matter in that way.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Miss Margaret Jackson.]

Committee upon Monday next.

NORTHERN IRELAND (LOANS) [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to make further provision with regard to the making of loans to the Consolidated Fund of Northern Ireland, it is expedient to authorise any increase in the sums falling to be paid out of or into the National Loans Fund in consequence of any provision of the said Act of the present Session enabling the Secretary of State to make loans to the Consolidated Fund of Northern Ireland, subject to a limit of £1,000 million on the aggregate amount outstanding by way of principal in respect of loans under—

(a) section 2 of the Miscellaneous Financial Provisions Act 1950; and
(b)section 35 of the Finance Act 1970; and
(c)the said Act of the present Session.—[Miss Margaret Jackson.]

CONSOLIDATION, &c., BILLS

Ordered,
That the Lords Message of 26th November relating to the Committee on Consolidation, &amp;c., Bills be now considered.—[Miss Margaret Jackson.]

Lords Message considered accordingly.

Committee nominated of Mr. Daniel Awdry, Mr. Richard Crawshaw, Mr. Greville Janner, Mrs. Elaine Kellett-Bowman, Mr. Ivan Lawrence, Mr. John Lee, Mr. Edward Lyons, Sir Anthony Meyer, Mr. Ivor Stanbrook, Mr. William Wilson and Mr. Alec Woodall to join with the Committee appointed by the Lords as the Joint Committee on Consolidation, &c., Bills.

Ordered,

That Two be the Quorum of the Committee.—[Miss Margaret Jackson.]

Message to the Lords to acquaint them with the Order necessary to be communicated to their Lordships.

ADJOURNMENT

Resolved,

That this House do now adjourn.—[Miss Margaret Jackson.]

Adjourned accordingly at nine minutes to One o'clock.